Essential Utilities, Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 5 August 2026: press release. Guidance figures: 3 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue rose 3% to $530.9 million: Operating revenues were $530.9 million against $514.9 million a year earlier. The company cited regulatory recoveries and purchased gas costs as the main drivers. Source
• GAAP EPS $0.37, adjusted EPS $0.38: GAAP net income was $105.7 million, or $0.37 diluted EPS, against $107.8 million, or $0.38, a year earlier. Adjusted EPS excludes merger-related expenses. Source
• Gas revenue fell on warm weather: Regulated natural gas revenues were $169.3 million against $177.3 million. Higher rates and surcharges were offset by lower purchased gas costs and lower volumes from warm weather. Source
• O&M up 3.5%, 2.6% excluding merger costs: Consolidated O&M was $153.6 million, up 3.5%. Employee costs rose $5.9 million, including merit increases and higher medical claims. Source
• $662.2 million invested in first half: Infrastructure investment totaled $662.2 million in the first six months, to improve regulated water and natural gas systems. Source
• Signed acquisitions pending closing: Signed purchase agreements for water and wastewater systems are pending closing and total about $282 million in purchase price, serving over 200,000 customers. Source
• Virginia and Ohio approvals received: The Virginia commission approved the merger on June 22, and the Ohio commission approved it on May 14, after the earlier Kentucky approval. Source
• Merger still expected in Q1 2027: Management continues to expect the merger to close in the first quarter of 2027, while approval processes continue to progress. Source

“While our organization transitions towards the targeted Q1 2027 merger with American Water, we remain steadfast in our commitment to driving peak operational performance,”

Essential Utilities Chairman and Chief Executive Officer Christopher Franklin

Guidance

What changed from last quarter

• Guidance kept: Management affirmed the EPS growth target and the $1.7 billion 2026 infrastructure investment figure, both unchanged from the first-quarter release. Source
• New: Virginia State Corporation Commission approved the merger with American Water on June 22, 2026. Source
• New: Public Utilities Commission of Ohio approved the merger on May 14, 2026. Source
• New: Company acquired a wastewater system in Bastrop County, Texas, from Integra Water Texas for about $4.9 million in May 2026. Source
• New: Quarterly cash dividend increased 5.25% to $0.3606 per share from $0.3426, payable September 1, 2026. Source

Second quarter results and drivers

• Revenue rose 3% to $530.9 million: Operating revenues were $530.9 million against $514.9 million a year earlier. The company cited regulatory recoveries and purchased gas costs as the main drivers. Source
• GAAP EPS $0.37, adjusted EPS $0.38: GAAP net income was $105.7 million, or $0.37 diluted EPS, against $107.8 million, or $0.38, a year earlier. Adjusted EPS excludes merger-related expenses. Source
• First-half net income declined: First-half net income was $330.1 million, or $1.16 per share, against $391.6 million, or $1.41, in the first half of 2025. First-half adjusted EPS was $1.21. Source

Regulated water and gas segments

• Water revenue up 7.6%: Regulated water revenues were $357.5 million, up 7.6%. Regulatory recoveries and higher volume were the largest contributors. Source
• Gas revenue fell on warm weather: Regulated natural gas revenues were $169.3 million against $177.3 million. Higher rates and surcharges were offset by lower purchased gas costs and lower volumes from warm weather. Source
• Water O&M rose on production costs: Water segment O&M rose to $109.4 million from $100.1 million, driven by employee costs, purchased water and chemical costs, and operating costs of acquired systems. Source
• Gas O&M held flat: Natural gas segment O&M was essentially flat at $49.9 million, against $49.8 million a year earlier. Source

“Crucially, both companies share a dedicated focus on smart capital deployment targeting measurable reliability and quality service.”

Essential Utilities Chairman and Chief Executive Officer Christopher Franklin

Operating costs and margins

• O&M up 3.5%, 2.6% excluding merger costs: Consolidated O&M was $153.6 million, up 3.5%. Employee costs rose $5.9 million, including merit increases and higher medical claims. Source
• Insurance and bad debt costs fell: Insurance expense fell $4.9 million, mainly on insurance recoveries. Bad debt expense fell $2.9 million, and customer assistance surcharge costs fell $1.5 million. Source
• Purchased gas and depreciation figures: Purchased gas expense was $46.2 million against $56.7 million. Depreciation was $109.6 million against $99.5 million. Source

Rate cases and rate awards

• $43.9 million of water rate awards: Year-to-date water rate awards and infrastructure surcharges add $43.9 million in annual revenue across five states. Gas awards in Kentucky and Pennsylvania add $12.7 million. Source
• Pending water cases total $79.7 million: Water and wastewater base rate cases or surcharges pending in five states total an estimated $79.7 million in incremental annual revenue, against $101.9 million last quarter. Source
• Pennsylvania gas case seeks $163.2 million: A Pennsylvania natural gas base rate case requests $163.2 million to support the Long-Term Infrastructure Improvement Plan, which replaces aging gas mains. Source

“The regulatory approval processes for our merger with American Water continue to progress.”

Essential Utilities Chairman and Chief Executive Officer Christopher Franklin

Capital investment and acquisitions

• $662.2 million invested in first half: Infrastructure investment totaled $662.2 million in the first six months, to improve regulated water and natural gas systems. Source
• Signed acquisitions pending closing: Signed purchase agreements for water and wastewater systems are pending closing and total about $282 million in purchase price, serving over 200,000 customers. Source
• DELCORA excluded from guidance: The $276.5 million DELCORA agreement is among the signed deals, but DELCORA has been removed from all guidance metrics. Management remains confident it can close the deal. Source
• Acquisition pipeline of 400,000 customers: Potential municipal acquisitions under pursuit represent about 400,000 customers. These are not included in the guidance figures. Source

Merger with American Water

• Virginia and Ohio approvals received: The Virginia commission approved the merger on June 22, and the Ohio commission approved it on May 14, after the earlier Kentucky approval. Source
• Merger still expected in Q1 2027: Management continues to expect the merger to close in the first quarter of 2027, while approval processes continue to progress. Source
• Shareholders approved merger in February: Shareholders of both companies voted in favor of the merger proposals on February 10, 2026. About 95% of voted shares at the special meeting were cast in favor. Source
• Merger costs excluded from adjusted EPS: Merger-related costs were $1.2 million in the quarter and $17.5 million in the first half. Adjusted EPS excludes these costs. Source

Financing, cash and dividend

• Quarterly dividend raised 5.25%: The board increased the quarterly cash dividend 5.25% to $0.3606 per share, payable September 1, 2026, to holders of record on August 11, 2026. Source
• Long dividend record cited: Management said the company has paid consecutive quarterly cash dividends for over 80 years and increased the dividend 36 times in the last 35 years. Source
• Debt cost and credit line availability: Weighted average cost of fixed-rate long-term debt was 4.16% at June 30, and $960 million was available on credit lines, down from $1.035 billion at March 31. Source

Coming up, as management said on 5 August 2026

• Merger closing expected Q1 2027: Management expects the merger with American Water to close in the first quarter of 2027. Source
• Signed acquisitions pending closing: Signed water and wastewater purchase agreements in four states are pending closing. The documents give no closing dates. Source

Figures management reported

Risks management discussed

• Regulatory: The merger with American Water still requires further consents and approvals before it can be completed. Source
• Demand: Warm weather in the second quarter reduced natural gas volumes compared with 2025. Source

Earlier plans management reported on

• On track: Management said the company is on track for $1.7 billion of infrastructure investment in 2026. Source
• Not stated: Management affirmed the EPS growth target and did not state progress against it. Source
• Not stated: Management kept its full-year O&M expectation, excluding one-time items and abnormal weather. Source
• Not stated: Management said it remains committed to elevated infrastructure investment levels. Source

Other quarters

• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.